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Culture, Institutions and Economic Growth

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  • Marion Payen
  • Patrick Rondé

Abstract

Are formal and informal institutions complementary or substitutable ? In this article, we argue that formal and informal institutions have a complementary relationship rather than a substitutable one. We study the possible complementarity between formal institutions, measured by Institutional Profiles Database (IPD), and informal institutions, measured by the World Value Survey (WVS), by including both into a growth model. Our main result shows that the interaction effect between informal and formal institutions in a country positively impacts growth, which support the hypothesis of a complementary between both of them.

Suggested Citation

  • Marion Payen & Patrick Rondé, 2020. "Culture, Institutions and Economic Growth," Working Papers of BETA 2020-18, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  • Handle: RePEc:ulp:sbbeta:2020-18
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    File URL: http://beta.u-strasbg.fr/WP/2020/2020-18.pdf
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    More about this item

    Keywords

    economic growth; formal institutions; informal institutions.;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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